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Promotion Allowance Levels at 10-year High: Promodata Study

CHICAGO -- A study conducted by research firm Promodata's Price-Trak Group projects a decade-high average promotion allowance of 15 percent by year's end. This high allowance level is being driven by consistent increases across all major product groups, with the exception of refrigerated foods, which peaked in 2002/03, according to the group.

December 13, 2005, 07:00 pm

CHICAGO -- A study conducted by research firm Promodata's Price-Trak Group projects a decade-high average promotion allowance of 15 percent by year's end. This high allowance level is being driven by consistent increases across all major product groups, with the exception of refrigerated foods, which peaked in 2002/03, according to the group.

While manufacturers of dry grocery, frozen foods, and household non-food products continue to allocate a higher percentage of their products' costs for available promotion allowances, those increases pale when compared to what health and beauty aid manufacturers are doing, Promodata said.

Off invoice and bill-back allowances offered by HBA producers in 2005 average 3.0 percent points higher than 2004 and have almost increased two-fold since the end of the last decade (1995), according to the study.

In explaining the increases, Promodata pointed to the continued competition between classes of trade, coupled with increased center of the store ROI pressures facing traditional grocery retailers.

Promodata is a Chicago-area research company for more than 35 years specializing in competitive promotion intelligence.